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Producer DynamicsNew Evidence from Micro Data$
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Timothy Dunne, J. Jensen, and Mark J. Roberts

Print publication date: 2009

Print ISBN-13: 9780226172569

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226172576.001.0001

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The Link between Human Capital, Mass Layoffs, and Firm Deaths

The Link between Human Capital, Mass Layoffs, and Firm Deaths

(p.447) 12 The Link between Human Capital, Mass Layoffs, and Firm Deaths
Producer Dynamics

John M. Abowd

Kevin L. McKinney

Lars Vilhuber

University of Chicago Press

This chapter uses the Longitudinal Employer-Household Dynamics (LEHD) data set to assess the human capital embodied in a firm's workforce and relate it to the performance of the firm. It observes that mass layoffs and firm failure are much more likely in firms with a large proportion of low human capital workers. Firms that do not fail generally upgrade the human capital of their workforce. Moreover, firms with a single displacement event are more likely to die. A single displacement event is linked with a significant reduction in the upskilling of the continuing firm's workforce. Furthermore, the analysis indicates that firms that disproportionately employ workers in the highest quartile of the skill distribution are less likely to close, even given a displacement event, than are other firms that experience displacement events.

Keywords:   human capital, upskilling, firm failure, mass layoffs, workforce, single displacement event

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